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Battle for Shumuk House rages on

It had all the makings of a sweet deal. Bonny Katatumba, a businessman who has amassed substantial wealth by taking over different properties, desperately needed money – about$5 million – to clear some debts.

Shukla Mukesh of the Shumuk Group of companies was on an aggressive expansion drive.

He set hie eyes on different sectors: milk, household utensils, forex bureaus, just to mention a few. So, when Katatumba shook hands with Shukla after agreeing to sell his Blacklines House sometime in 2008, little did he know that this was the start of a long and messy legal battle.

Today, both parties accuse each other of underhand tactics bordering on outright fraud. What started as a win-win deal between two city businessmen has left one bruised and on the verge of collapse.

In an agreement signed on August 16, 2008, Katatumba agreed to sell his property to Mukesh at a cost of $5m. As part of the transaction, Katatumba gave Mukesh a list of creditors who were supposed to be paid.

Creditors included Crane Bank, which was supposed to receive the largest portion of $2,450,000, Virani was to get $750,000, Harish $200,000, Tecton $200,000, Peter Lule $400,000, Centenary Bank $100,000, Arvind Patel $500,000, Ben Kavuya $200,000 and city lawyer Charles Odere $200,000 – which adds up to $5m.

The agreement was signed in the presence of Arvind Patel, who introduced Mukesh to Katatumba. Mukesh is Patel’s nephew. However, two months after signing the agreement, Mukesh approached Katatumba, and told him that due to the spillover effects of the global economic meltdown, he was hard-up on money, and he wanted to pull out of the deal.

He instead made Katatumba a take-it-or-leave-it offer of $4m, which Katatumba accepted. To effect the new agreement, Mukesh proceeded to pay the creditors as listed in the first agreement.

In the new deal, Katatumba also offered Mukesh the land title for his Hotel Diplomate in Muyenga. According to Katatumba, Mukesh used the land title to acquire a loan from a city bank.

But before Katatumba handed over the title to Mukesh, the two men had a discussion where Mukesh showed interest in partnering with Katatumba to revamp Hotel Diplomate, and that this particular property had nothing to do with the sale of Blacklines House (now SHUMUK House).

Mukesh paid Katumba only $3,059,000. He failed to pay the balance, forcing Katatumba to drag him to court. While in court before Justice Lameck Mukasa, Mukesh admitted that he owed Katatumba $1.7m and a High Court judgment dated May 20th, 2009, ordered Mukesh to pay that sum to Katatumba.

“The sum guaranteed ($1.7m) shall be payable  to the plaintiffs creditors which shall include, but not limited to the remaining condominium title holders in accordance with such schedule as shall be submitted by the first plaintiff [Shumuk Springs  Development Ltd] to the defendants in a period of 30 days. Such schedule shall not exceed the sum of $1.7m,” agreed Mukesh in a consent order before Justice Mukasa.

Katatumba says he has not received the balance from Mukesh up to this day. The matter became even more complicated because immediately after transferring the titles into his names, Mukesh allegedly entered into a hotel management contract with George Kamugisha to manage Hotel Diplomate. Katatumba did not know of this arrangement, according to our sources.

At the moment, Mukesh Shukla has lost his legal attempt to stop the former owner Boney Katatumba from selling off the same building. Shukla and his three companies dragged Katatumba and six other parties to court seeking a permanent injunction prohibiting them from selling Shumuk house located on plot 2 Colville Street.

Other parties which were dropped from the case by Justice Christopher Madrama because they were not party to the first consent order   are Virani Bahadukadi, Joseph Sempebwa, Peter Lule, Tecton Group, Patel Arvind and Registrar of titles. The judge also noted that the current plaint discloses no cause of action against these would be defendants.

Shukla, through his Counsel Augustine Kibuuka Musoke, has been contending that in an earlier suit, there was a counter claim mentioning an agreement between two of his companies and Katatumba.

Dismissing the case Justice Madrama agreed with Katutumba’s Cousel Benson Tusasirwe that the suit where the consent order was entered is still pending and that the consent order has not been set aside and is still enforceable as an order of the High Court.

“The suit against the first defendant [Katatumba is frivolous and vexatious and an abuse of the process of this court. The suit against the first defendant is accordingly dismissed with costs….,” Justice Madrama ruled.

The battle for the property still rages on in a case that has turned into a nice example of the workings of corporate sleaze, and jumbled up legal jargon, that has seen many traders lose property in similar circumstances.


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